Providian

Posted by Razor (65.33.36.192) on April 15, 2002 at 20:53:39:

Providian is going under and is unloading many of its accts. Thats why the rate hikes on many of its cards. Here is the article.

Providian Financial to Sell $2.6 Billion in Higher Risk Assets
The Associated Press
Published: Apr 15, 2002

SAN FRANCISCO (Dow Jones/AP) - Providian Financial Corp. agreed to sell about $2.6 billion in higher risk assets to two limited liability companies formed by affiliates of Goldman Sachs & Co., Citigroup Inc.'s Salomon Smith Barney, CardWorks Inc., and CompuCredit Corp.
Last November, the financial services company put its international credit-card businesses in Argentina and Britain up for sale and said it was pursuing the sale of $3 billion in high-risk credit-card receivables.

Providian prospered in recent years by lending to borrowers with limited or risky credit histories. But as the economy soured, growing numbers of Providian's customers stopped paying their bills.

Providian said Monday that the purchasers plan to finance the acquisition through a securitization.

Providian's Providian National Bank will hold an interest in the securitized assets valued at about $155 million, and the parent company will also retain an option to purchase up to 15 percent of the equity in the limited liability companies.

The transaction, expected to close in May, includes about 1.7 million credit card accounts.

Under the terms of the deal, Providian will continue to service the portfolio for up to 12 months.

Providian says it currently holds substantial capital and reserves against the assets in the portfolio.

While closure of the transaction will result in a loss of $240 million for Providian, the deal should also result in an improvement in Providian National Bank's risk-based capital ratios by removing higher risk-weighted assets from its balance sheet.

In February, Providian reported a fourth quarter loss of $481.2 million, which included charges of more than $1 billion, largely to clean up its troubled credit-card business.

At the end of 2001, Providian had total credit card loans of $32.7 billion.

Separately, CompuCredit said Monday that it agreed to purchase about $1.3 billion in credit card assets from Providian, in conjunction with affiliates of Goldman Sachs & Co. and Salomon Smith Barney.

New York Stock Exchange-listed Providian shares traded Monday at $8, up 31 cents, or 4 percent.

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